Can You File Bankruptcy If You’ve Been Convicted of a Crime?
A Criminal Conviction Does Not Bar You from Filing Bankruptcy
Under U.S. bankruptcy law, anyone with debts can seek relief through bankruptcy—even individuals who have been convicted of a crime. The Bankruptcy Code does not prohibit convicted individuals from filing.
As stated in In re Paul A. Nelson, P.A., 203 B.R. 756 (Bankr. M.D. Fla. 1996), “Bankruptcy is available as relief to financially pressed debtors, and not as shelter from consequences of criminal acts.”
That means you still have the right to file bankruptcy if you qualify under Chapter 7 or Chapter 13. However, the court will not allow bankruptcy to be used as a way to escape punishment or restitution ordered in a criminal case.
Limitations: Bankruptcy Can’t Erase Criminal Fines or Restitution
Public policy strongly protects crime victims and the justice system’s ability to impose punishment. As a result, debts connected to criminal cases are generally nondischargeable—meaning they can’t be eliminated through bankruptcy.
Under 11 U.S.C. § 523(a)(7) and § 523(a)(13), the following debts cannot be discharged:
Criminal fines and court fees
Penalties or forfeitures payable to the government
Restitution ordered by a criminal court
The U.S. Supreme Court in Kelly v. Robinson, 479 U.S. 36 (1986), confirmed that criminal restitution serves penal and rehabilitative purposes—not merely compensation—and therefore cannot be wiped out in bankruptcy.
Federal crimes, under 18 U.S.C. § 3663A, make restitution automatically nondischargeable. State-level convictions are treated similarly, depending on the bankruptcy chapter and jurisdiction.
Victims’ Rights Are Protected
If your conviction involved a victim, bankruptcy cannot be used to significantly reduce or impair that victim’s right to civil recovery. Courts have emphasized this balance in cases such as In re Carsrud, 161 B.R. 246 (Bankr. D.S.D. 1993), which held that a debtor cannot use Chapter 13 bankruptcy “to significantly impair a crime victim’s right to obtain civil recovery.”
This ensures that bankruptcy does not undermine the justice system or the rights of victims seeking compensation.
Criminal Sentences and Bankruptcy Rights Can Coexist
Even though criminal penalties can’t be discharged, filing bankruptcy can still help manage unrelated debts. Courts recognize this balance. In In re Allman, 43 B.R. 840 (Bankr. D. Colo. 1984), the court noted that state judges are expected to craft criminal sentences that respect a debtor’s right to seek bankruptcy relief.
In other words, while criminal restitution or fines remain, bankruptcy can still provide a fresh start for other financial burdens—like credit card debt, medical bills, or personal loans.
Key Takeaways
✅ You can file bankruptcy even if you have a criminal conviction.
❌ You cannot use bankruptcy to discharge criminal fines, restitution, or penalties.
⚖️ Victims’ rights and public policy limit how bankruptcy interacts with criminal debt.
💡 Bankruptcy can still help with unrelated financial hardships—offering breathing room from creditors while you handle your criminal obligations.
Bottom Line
A criminal conviction doesn’t close the door to bankruptcy relief. However, while bankruptcy can help you regain control over most types of debt, it cannot erase the financial penalties tied to criminal acts.
If you’re struggling with debt and also dealing with the financial aftermath of a criminal conviction, speaking with a bankruptcy attorney can help you understand your rights and options.
Need Guidance?
At Bankruptcy Near Me, we help individuals in California and Maryland navigate complex bankruptcy cases—even those involving criminal restitution or government fines.
📍 California Office: Santa Ana, CA – Call 714-798-2544
📍 Maryland Office: Kensington, MD – Call 301-550-5408
📧 Email: info@bankruptcynearme.org
Our experienced bankruptcy attorney, Iris Kwon, can help you understand how bankruptcy fits into your financial recovery plan.